Sara Lee says it plans to streamline operations

By Associated Press

CHICAGO (AP) - Sara Lee Corp. today announced it will undertake a three-year restructuring, under which it will raise $3 billion in cash by selling some assets and using outsiders for some work to reduce expenses.

The restructuring means Sara Lee effectively will get itself out of the business of manufacturing many of the goods it sells. It instead will focus on building its brand names, analysts said.

The Chicago-based maker of Ball Park franks, Hanes underwear and Coach leather goods said it expects to take a $1.6 billion charge in fiscal 1998 related to the sale and write-down of assets that do not fulfill its plan of building global brands. The $3 billion it will raise will be used to buy back its stock over the next three years in the open market.

"This restructuring program is aimed at fundamentally reshaping Sara Lee Corp. for the future," said John H. Bryan, the company's chairman and chief executive.

As part of the first phase of the restructuring, the company said it has entered talks to sell its knit-related yarn and textile operations. The sale would generate $500 million in cash over the next three years, the company said.

Sara Lee also plans to sell other assets, including food and non-food businesses, in subsequent deals over the three-year period.

Profits, margins and returns are expected to improve through lower fixed expenses and reduced operating costs, the company said. It did not give an estimate of how many jobs might be affected. Sara Lee has operations in more than 40 countries, with more than 135,300 employees worldwide.

Sara Lee earned $1 billion, or $1.97 a diluted share, on sales of $19.7 billion for the year ended June 28, 1997.